Q1 2020 Earnings Call
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We thank you for your patients.
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Conference call.
This time, all participants are listen only about a question and answer fashionable followed formal presentation.
If anyone should require offered assistance during the conference. Please crust star's there on your telephone keypad.
Reminder, is conferences being recorded.
I would not like the to the conference over to your host Mr. Pete Mariani, Chief Financial Officer Smiley.
Thank you very good afternoon every one joining me on today's calc with care that are <unk> accidents, Chairman Chief Executive Officer imprisonment.
Care will begin our call with an overview of R. Q1 performance. Our response to the code that 19 pandemic and provide an outlook on the developing recovery.
Provide an analysis of our first quarter financial performance and the impact of our costs mitigation initiative. Today's call is being broadcast live via via webcast, which is available on the investor section of the oxygen website within an hour follow in the end of the life call a replay will be available in the ambassador sex.
One of the of the website at W.W.W. accidentally dot com.
Before we get started I'd like to remind you that during this conference call. The company will make projections and forward looking statements regarding future events. We encourage you to review the company's past and future file is what the F.C.C., including without limitation. The company's forms 10, k. and tend to which identifies a specific.
Factors that may cause actualresults more advanced to defer materially from those described in these forward looking statements. These factors may include without limitation statements related to the expected impact of Kobe 19 on our business statements regarding product acquisition or development product.
Central the regulatory environment sales and marketing strategies capital resources or operating performance and with that I'd like to turn the call over to Karen Karen.
<unk> and good afternoon, everyone.
I'd like to start the call by expressing our admiration and appreciation for the health care professionals for working tirelessly on the front lines to care for people suffering with covert 19.
We're confident in the global communities ability to overcome the challenger pandemic.
But also like to offer a sincere thank you to the entire accident team.
The past several weeks of rent a significant adjustment for us all including our employees and their family.
Our team is working diligently under challenging circumstances to ensure that patients answered you have on interrupted access to our nerve repair products and support.
And for that I'm deeply grateful.
And the first quarter of 2020, our total revenue grew 4.2% to $24.3 million.
Although revenue exiting February with printing toward our annual guidance the reallocation of hospital resources and affirmative elective procedures had a material negative impact on our revenue in March.
Additionally, we believe that demand for a nerve repair products have been temporarily reduced as nationwide stay at home orders have lowered the incidence of traumatic injury.
A steep decline and our daily sales I asked began the first week of March and continue to drop through early April.
In our weekly sales ran as low as 70% below our two forever.
Since that time, our daily sales have demonstrated steady improvement, suggesting where in the early stages of recovery.
We are also encourage the hospitals and clinics are now beginning to open their elective surgeries gecko, which will drive recovery a circle volume.
In response to the current restrictions in hospital and community activity as well as anticipated reduction of revenue caused by these factor.
On April 23rd when asked the cost mitigation initiative designed to defer entered his certain expenses and capital expenditures during this time.
Already do this in more detail on his comment.
Our top priority throughout the covered 19 pandemic has been the health and safety of those we sir.
Pudding health care professionals in their patients as far as our employees communities and suppliers.
And we've adapted to this new environment to continue to support our customers and their patients.
To achieve these objectives are took the following stuff.
That was an executive level covered 19, cortine, they meet barely to review and implement and communicate state and C.D.C. guidelines and other important safety and operational protocols across the organization.
Instructed all feel based team to support customers remotely entering hospital or clinic only at the request of her surgeon or hospital staff to support patient care and to complete all task in a manner that minimized as human contact and maintain social distancing.
Converted office based staff to work from home arrangement.
Divided our Texas distribution organization into two independent team's working on rotational weekly schedule to create separation and the event unemployed was exposed to the virus.
[noise] temporarily suspended the collection and processing of tissue, allowing utilization of existing inventory and preserving P.P.E.
Established a backup distribution center in our last what headquarters facility.
And established new safety protocols and training at each of our facilities that include social distancing mask wearing dairy cleaning and disinfecting.
As a result of these and other measures I'm very happy to say that our team is healthy and has effectively adapted to this new environment.
Our sales representatives remain and frequent contact with our customers to support their neat.
We've also uses time with our sales rough to provide additional product and skills training and multiple sufficient sessions each week that we branded spring training.
These sessions have been highly interactive and included guess certain speakers.
That's practice sharing for remote taste coverage and provided the opportunity to plan new protocols on how to safely reengage with account if they re open their surgery schedule.
Oh now like to spend a few minutes detailing the impact of this pandemic on the nerve repair market along with our preliminary thoughts and how it could evolve surgical procedures continue coming back online at hospitals and surgery Center.
Well elective procedures, including nerve repairs declined significantly as health care resources in supplies were devoted to cope with 19 patient care. We believe the American colleges Surgeons carpet 19 guidelines are favorable for meaningful segments of the nerve repair market as we look forward.
These guidelines recommend that acute nerve injuries and acute hand extremity trauma should be addressed and managed emergent way if the facility has resources available.
In addition, oncologic had enough procedures are recommended to be addressed urgently.
If the facility needed to defer trauma cases.
Many nerve injuries can be repaired and then delayed fashion.
Well early nerve repairs typically associated with optimal outcome data from our Ranger studied demonstrates that nerve injuries repaired up to six to 12 month post entry still report meaningful recovery rate.
Well covered 19 has delayed or deferred many of our breast normalization procedures are recent station techniques allow surgeons dinnertime and autologous preference instruction in both delayed and delayed immediate breast reconstruction cases.
We believe chronic pain and aroma procedures were <unk> based on the severity of patient sometimes with severe an intolerable nerve pain treated when resources were available.
If the nerve pain was manageable with conservative therapy. The case was typically deferred.
We anticipate that many patients with injuries who's repairs been deferred or delayed well seek treatment based on the severity of their symptoms as restrictions on surgery schedules are listed.
Additionally, we believe the incidents of nerve entries will increase estates lift shelter in place orders and timidity activities return.
For these reasons and despite the current uncertainties related to covert 19, we believe the nerve repair market can experience a steady recovery.
Oh now like to quickly touch upon area to progress we made with our five colors of growth during the quarter, including any updates on how these initiatives have been impacted by carbon 19.
In the area of sales execution.
Elected to hold on a number of direct sales representatives flat during the quarter ending with 109.
As a result, the average tenure ever direct sales reps have continued to increase with greater than 60% of our team exceeding 12 month with the company as a quarter end.
Or direct sales channel is supplemented by 19 independent sales agencies the cover target age at target accounts.
Maryland remote geography.
Direct sales representative practically 90% of our first quarter revenue compared to 85% a year ago.
During the quarter, we continue to strategically focus our sales representative our largest market opportunity of extremity drama and on driving deeper penetration with our existing surgeon customers.
Within these accounts or sales reps are also continuing to selectively inefficiently grow the adoption never nerve repair products for oral and maxillofacial applications.
And we deploy a team of eight sales specialists focused exclusively on breast reconstruction or division.
We believe we're making good progress with this focused strategy as evidenced by our continued development of active accounts.
Our number of active accounts increased 13% and the quarter to 825.
Additionally, active account revenue increase by 7% over the prior year.
This growth was driven by an increase in the number of surgeons has used accident products with greater frequency and additional account.
[noise] were encouraged by the early results of our commercial improvements. Despite the corporate 19 disruption and we were in firmly focused on execution as we anticipate restrictions on elective procedures being carefully lifted geographically during the second quarter.
It's important that we continue to build awareness of accident at our products. Despite restrictions on certain traveled to scientific conferences.
Are surgeons customers are increasingly using online platform to stay abreast of the latest developments in their repair, especially in today's environment.
And we're there for expanding our digital capability for.
For example are accident nerve matters surgeon community continues to grow with more than 3000 clinician members a quarter end and more than 29000 peer to peer engagements during the quarter.
Our efforts to educate surgeons in developed advocates continued to in the first quarter as we held the first two national education programs schedule for 2020, including a program focused on the repair of mixed and motor nerve injury.
And the program for all M.F. Fellows.
We have cancelled or postponed our programs schedule from mid March through July due to restrictions on travel and social distancing measures.
We remain committed to search and education, including hand, and Mike or surgery fellow.
And are developing alternative education programs, including Webinars. These virtual events will be search and led with a focus on advances and best practices and nervous care.
We're hopeful that we can resume our national programs later in the year.
We previously previously discussed our plans to introduce new products and expand the application of our portfolio into the surgical treatment of pain focused on symptomatic <unk>.
At our National sales meeting in February we provided extensive neuroma management training for sales team and launched Axa Gardner cap and important addition, tore solutions portfolio designed to protect a peripheral nerve and and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma.
With the addition of nerve cap, we now have a full portfolio products for nerve connection nerve protection and now nerve termination.
Increasing searching adoption of our product portfolio continues to be supported by a large and expanding body of clinical data.
Are Ranger registry now has over 2100 Andrews enrolled and in February the Ranger investigator team published a paper in the journal micro surgery entitled peripheral nerve repair throughout the body with process nerve allograph results from a large multi center study.
The paper includes the largest dataset reported from the registry with quantitative outcome from 385 subjects and 475 nerve repair.
The study included the injuries from head to toe and includes sensory mixed and motor nurse and finding Sean overall, 82% meaningful recovery rate and gaps of up to 70 millimeters.
These results were consistent with prior recorded data for events and comparable to historical literature for nerve autograph without the known complication of daughter fact, morbidity and exceed that of conduit.
This comprehensive publication includes more than 10 years of effort.
And is the largest body of evidence available on the role and impact of advance nerve graft and contemporary nerve surgery.
This publication provide important real world data that can help guide healthcare decisions and strengthen our value proposition was pairs and provider.
Covered 19 have impacted or clinical study programs and we've implemented strategies to help manage the disruption.
Are we can study remains open enrollment at a few select center.
The recount enrollment is very near completion with only a few subjects remaining will continue to work with our research sites and an effort to reach the targeted enrollment of 220 subjects.
We believe any enrollment delay will not negatively impact the trial or the enforcement discretion provided by the U.S. food and drug administration.
We've also increased our efforts to support completion of subject follow up visits during the covert 19 crisis.
We've implemented and expanded home health visit program to allow follow up visits to be conducted by a trained healthcare professional outside of the clinic environment and with the appropriate safety precaution.
We are working closely with our research centres to monitor follow visit windows and minimize any potential destruction.
<unk> these measures will support our efforts to complete the recon study.
Ranger and match will continue to enroll however, we anticipate the enrollment rate will be slowed as centres reassign resources and reduce personnel to manage their individual cover 19 response needs.
Fortunately the study design allows for qualified subjects demand road retrospectively hauling their actual nerve repair.
We also intend to continue enrollment and I'll Repost study, which is a prospective randomized controlled study evaluating the use of axoguard nerve cap and the management of painful neuroma as compared to a standard interrupting me procedure.
Oh comes from the oppose study pilot phase where presented it this year American society of personal nerve.
He found that at six month pain and quality of life skills reported improvements that were two to five times greater than they established minimally important clinical difference for the scale.
Well. This is a small pilot study we remain encouraged by the positive impact reported today and intend to continue enrollment of the comparative phase of the study when the study centres reopened to research subjects.
Yeah.
With regard to our sensation now clinical registry.
We are pleased with the enrollment of 600 subjects to date.
And believe this will create a significant body of evidence around this important technique.
With Cobin 19 related restrictions on research staff at studies centered we've made the decision to pause enrollment for the remainder of 2020.
Similarly, we've decided to pause enrollment for our rethink pain registry and or assist study.
We will continue to monitor the recovery of activities at study center and prioritize the potential restart of these clinical program the best fit our business name.
We remain committed to providing meaningful and impactful clinical evidence on the utility of our nerve repair portfolio.
Over 19 have had a significant impact on healthcare in general and certainly on our business.
We've taken significant steps to protect the health and safety of those wieser and we've adapted our business to this new environment to continue to support our customers and their patients through the crisis as the recovery develop.
We're encouraged by the trends and expect continued improvement estates began to lift restrictions on hospital procedures and community activities.
As of this week, we've released Garfield teams to began re entering healthcare facilities following local regional and national guidelines.
And using contact racing.
We are beginning to we're beginning to return to our offices and lab and planning to restart tissue processing and the second quarter.
We believe that the underlying fundamentals of our business and the nerve repairing market remain intact.
And we continue to focus on our mission to restore nerf function and quality of life to patients with peripheral nerve injury.
Now turned the color to P. for a review of financial highlights P.
<unk>.
First quarter of new group, 4.2% to $24.3 million, that's carrying mentioned, although revenue exiting February was trendy <unk> annual gardens are first quarter revenue was negatively impacted in the month of March as our customers reallocated resources to prepare for entry coded 19 pace.
And a shelter in place orders reduce the incentives traumatic injuries are revenue growth for the quarter, whose result of increases and universal him as well as the net impact a price increases and changes in product mix.
Gross profit for the first quarter was $19.4 million.
Decrease compared to 19.6 million. If you want of 19 gross margin was 80.1% for two one compared to 84% and the prior your first quarter gross margin was negatively impacted in few one as a result of increase period and variance costs recognized in the quarter.
Resulting from our Tipperary suspension of tissue processing for most of the month with March and increases in reserves for estimated excess an obsolete inventory to account for expected lower product demand during the period of recovery.
Total operating expenses in the first quarter was $28 million compared to $29.8 million in the prior year increases the salaries and benefits from increased headcount and project expenses in the current border where more than offset by a 1.2 million dollar reduction in litigation.
Please and 1.8 million, then lower noncash stock compensation expenses.
The decrease in stock compensation in the first quarter is primarily related to forfeitures or performance stock works.
Sales and marketing expenses than the first quarter was $17.8 million compared to $16.4 million in the prior year. This increase includes the impact of our expanded direct sales footprint and increase the market development activities has a percentage of total revenue sales.
The marketing expenses increase the 73.5% for the three months in March 31st compared to 70.6% from the prior year.
Research and development spending in the first quarter was $4.6 million compared to $4.1 million in the prior year research and development costs include clinical research product development, including expenses in support of our Bill a for the advanced nerve grouse.
<unk> expenses represented approximately 50% of total aren't the in the first quarter compared to 55% in the prior year walk political expenses represented the other 50% into one of 2020 compared to 45% and the prior year the increase in our clinical spin.
Reflects the expanded breath of archaeological portfolio.
Or clinical trial activities decreased toward the end of a quarter due to the cobin 19 related restrictions clinical sites.
As a percentage of total revenues research and development expenses were 19% into one compared to 17.8% and the prior year.
[noise] general and administrative expenses in the first quarter with $5.5 million or 22.7% of revenue compared to $9.2 million or 39.5% of revenue in the prior year.
The decreasing G.N.A. included 1.8 million of lower noncash star compensation in the current quarter, primarily related to Forfeitures would performance talk ward as well as $600000 of lower corporate expenses, including general legal and bus relations in other services.
Additionally, prior year G.N.A. included 1.2 million of litigation costs associated with the class action suit filed January 9th 2019, but has since been successfully litigated than was dismissed on April 21st of this year.
The United States District Court for the Middle District of Florida dismissed the case or dismissed the class action.
<unk> without prejudice finding that Neil on on the plane of failed to stay to claim upon which relieve could be granted the plane of have 60 days to file an amended complaint or the action will be dismissed with prejudice.
Not lost in the first quarter was $8.2 million or 21 cents per share compared to $9.5 million or 24 cents per share in the prior year, excluding the impact of noncash dot compensation as well as litigation or related charges adjusted not Lawson net loss per share for two one.
The $7.6 million.19 per share compared to $6 million.15 per share in the prior year.
Adjusted Eva dollar loss in the corridor, which also excludes the impact of stock compensation litigation and related charges.
$7.6 million compared to an adjusted even dollar loss of 6.5 million and the prior your corner.
Turning to our balance sheet balance of cash cash equivalents investments as of March 31st.
It was $89 million compared to 102.5 million that'd be a little before quarter for 13.5 million dollar change in cash in the corridor included $10.2 million or items unique to Q1, including construction payments for our Dayton and Tampa facilities payment.
Over 2019, all employee performance bonus annual sales awards and related costs prepaid insurance payments and our annual sales meeting.
On April 23rd we announce the we had received a 7.8 million dollar Paycheck protection program loan from the small business administration.
We obtained alone pursuant to the original guidance of the S.B.A. to preserve positions in the company by providing necessary economic relief. During this period of reduce surgical volumes because of the negative a business effects of cobin 19. However in today's release, we noted that we believe.
That the subsequent guidance issued by the Treasury Department change would be original intent of the program by stating that it would be unlikely the public companies would be able to meet the standards for receiving the loan.
As a result of this change the company returned alone on May 5th.
On April 23rd we also announced the cost mitigation initiative designed to differ that can reduce certain expenses and capital expenditures in response to the anticipated reduction of revenue caused by the ongoing cobin 19 pandemic.
This initiative included reduced executive compensation and board for use by 20%.
Reduce cash compensation for all other exempt salaried employees by 10% to 15% completed an employee lay off of approximately 10% of our workforce and implemented a hiring freeze deferred completion of our new biologics processing center in Dayton, Ohio by up to one year.
Oh and reduce certain discretionary spending.
We took the salary reductions in recognition of the need to lower spend while preserving capability across the company for the recovery to lay off and other cost reductions primarily occurred in areas that are most directly impacted by the current restrictions including travel conferences.
Tissue collection, and processing clinical surgeon education, and certain projects and programs not critical to patient care.
I was carrying noted we're continuing to fully fun certain clinical trials or clinical studies, including Recon Ranger match and repos.
But we'll see reduce spending and sensational and rethink pain registry as well as other developing clinical programs.
The differed construction of the Dayton facility will allow us to the for $25 million of 10 Bucks from 2020 to 2021.
We also extended belief that our existing facility to provide adequate tissue processing capacity until the new building is complete.
Validated.
We believe we've taken a balanced approach with this cost mitigation initiative that demonstrates the flexibility of our business model, while allowing us to maintain a focus on the commercial execution required a surgical volumes return.
Although we anticipate higher cash burn a cue to due primarily to the impact of lower revenue and payments for work completed on the Dayton facility prior to the suspension of construction. This cost mitigation initiative well preserved cash over the next several quarters and will allow us to reset the business.
On a more efficient runrate.
The P.P.P. long would've provided additional flexibility as we monitored the impact of the cobin 19 on our business, but because we returned alone we may take additional cost reduction measures based upon the recovery of surgical volumes and explore other nondilutive pronouncing alternatives.
While the path in pace of recovery, maybe uncertain. We are encouraged by indications that we are in the early stages of recovery and we're confident that we will emerge from this downturn they stronger leaner more resilient organization and believe we will be on a path to profitability.
Then with that I'd like to him to call back over to <unk> <unk>.
We are encouraged by the momentum we were seeing and our commercial strategy prior to the downturn.
We are highly confident that we have the right strategy in place for the current environment and to support demand once it returns to more normalize level.
At this point I'd like to open up the line for question Jerry.
Thank you at this time will be conducted a question and answer session. She would like to ask a question. Please presses star one on your telephone keypad, a confirmation told will indicate the July using the question too.
You may 1st start to its you'd like to remove your question from the chip.
Four participants using secret, but then it may be necessary to pick up your handset before pressing the sarkies.
One moment, please while we pull for questions.
The first question is from the church the butter S.V.B. Leering. Please go ahead Sir.
Hi, This is Jamie on for rich again.
Hey, guys and just start.
<unk>.
Encouraging that you guys are starting to see some of the thing improve also kind of like a low point in the beginning of April I'm. Just curious are you <unk> conversations you're having with customers are you seeing them rescheduling procedures at this point for a later date.
Can you talk about some of the challenges that navy or potentially hearing from them from a capacity standpoint as he knows throughout the rest of this year and then just thirdly on that you know one of the things that we're hearing is that a few could potentially be playing a bigger role help expand capacity. So he just.
<unk> a little bit about.
How many procedure you know are done in A.S.C. or how many active account do you have that are currently agencies and maybe your strategy to potentially broaden your reach their going sour.
Yeah, now that Jamie certainly the recovery that we're seeing is highly variable geographically.
There's some very big differences between what you see in New York City, and Baltimore and other cities that have had a significant covert 19 impact as to as compared to other areas that have had a lower run of the disease and so we've seen that a geographical difference we we started.
Things pick up off of our low in April, but certainly in the last a week as elective procedures have opened up again, we're starting to see an increase in volume and in all types of procedures not just not just the urgent trauma procedures.
We are starting to see what we believe are some patients coming back but most of what we're seeing I think are really the patience or procedures that would be our regular base. We do believe that the majority of the patients who were deferred we'll come back for for care.
It's a complex and I'm I'm sure you and all the other people on the line have spent a lot of time thinking about this as well, but it's a complex equation of how things are going to get schedule. Because it is both surgical oh, our time availability and impatient willingness to come back into the L.R. and actually.
That was our first sign that there was a serious problem and and volume drop in early March we saw significant numbers of patients being no shows even for trauma repair, but they had a trauma the night before their schedule. The next day to get their nerve repair done and they just didn't come back.
Particularly in areas that had a higher a pickup of at that point was the earlier stages of the disease progression. We're not seeing that now we're seeing patients are coming back pour their procedures were not seeing the no showing the procedures and we're seeing a growing rate of the procedures.
I also ask about his amateur eye surgery centres going to be a part of that it was not through the first quarter, we didn't see a shift into ambulatory surgery centers as the disease was ramping up but we do anticipate the surgeons and hospitals are trying to be very flexible both in the hours that they say.
Schedule procedures, we talked a lot of our surgeons were saying they'll work evenings or weekends in order to be able to maximize their all our time and they're looking at whatever site of care would be appropriate for the patient and that's where we see that the benefit of some of the new changes in the payment schedule.
Oh, well initially only Medicare some of our active centers are increasing are interested in increasing their nerve repair are able to talk to their private pairs and leverage that.
So so well, we're not specifically going after ambulatory surgery centres, we're going after working with our surgeons and following them to where they go in their care, we think run a good situation to be able to to follow them into those advertised surgery centers for their simpler nerve repaired.
<unk>. Thank you very much and then just P. I guess from a modeling standpoint on the gross margins obviously.
<unk>.
Expectation. So just you know help calibrate.
How should we be thinking about that.
Remainder of the year given that you know revenues are obviously going to see some pressure due to the cogan 19 situation.
No I think we had unique items here in the first quarter that impacted margins and we'll see that again I believe in in Q. too much more so from the inefficiency of the not producing them in the lower.
Revenue numbers that we would oh expecting to to but once we see more volume coming into the recovery in the back half of the year I think we'll see the normalization of margins.
Thank you.
Mmm.
Sure.
The next question Raj the noise Jefferies. Please go ahead Sir.
Hi, Good afternoon, what is maybe I could start with the sales force you know I know you guys have talked about a hiring freeze I'm, assuming we should assume.
That the sales for stays about 109 people for the balance a year you know one I'm I'm curious if that's correct.
Second I'm curious, how you're thinking about the sales organization at this point you know given the lack of access into hospitals now given hi restrictions or uncovered and things you know how do you think about how that might impact the business going forward.
So terms of the sale side, and we will continue to look at improving and maximizing the productivity of our sales team I'm not telling you that we wouldn't find a selected territory here in there that we thought we needed to go ahead and make a change.
But our focus is going to really be on maximizing that productivity.
In terms of access again, another highly variable effective very local.
Differences are wraps it started to go back into hospitals and work more directly in health care facilities over the last week.
The access into hospitals ranges from near no change two you have to be shown that you're have a negative covert 19 test within a certain period of time and be fitted with your and 95 mask.
Before you can even come into the facility.
There's a high range of variability of direct face to face access I think for US what that was why we did our spring training with all of the sales team and spent a lot of time working with a wrap thinking about re imagining are selling model that says if you are not face to face with a surgeon and their support staff how can.
You still be a resource in health and frankly, we got some you know live training on that as we did it could be able to support cases that were done and continue to interact with and and work with surgeons on expanding their treatment a pattern. So I think we've had a training by.
Real life as we did that and will continue to implement that.
[noise] okay.
Thanks for asthma okay.
He's gone we have a question from Danny.
<unk> J.M.P. Securities. Please go ahead.
It's actually Dave <unk>.
Yeah, he made a cute cute in as well, but how how are ya.
I was wondering about that if you change your name [laughter] not yet.
So you mentioned to slow down and trauma from shelter in place I. Just wondered do you have any way to quantify that any data look at that kind of points to that or how much of an impact that could've been.
Yeah.
I don't have data that I can point you to that that you could go and look up we we've spent time talking a surgeon, saying what are they seeing what did they think is happening in the marketplace.
If I take a step back and think about what is the incidents of trauma. What are the majority of things that we see and and they end up being things like power tool injuries.
Lacerations from knives and.
Sharp things and glass those are <unk> three categories of the types of things that impact us and caused nerve injuries and all of those can be impacted by the shelter at home, there's less people in jobs using power tools. So there may be they may have less.
Job related injuries on the other hand, we've definitely seen an increase of the Guy decided a fire up the chain saw while he was at home a little back and Unfortunately may have had an accident with that so we've had a little bit a balance of those types of injuries definitely with restaurants being closed in slowed down.
<unk> fewer lacerations. So we believe that it was down some <unk> you know.
Maybe a few maybe something in the greater than 10% to 20% range, but we're not at the half range.
And we think the majority of those patients who are still injured will likely come back for treatment.
Got it and maybe one for P., you know 89 million and cash and seven and a half million habitat loss.
Looking at all that announcements that you made you know prior to even the quarter. So.
In terms of the cuts and.
<unk>, 10% workforce reduction everything I just.
<unk> good spot that that maybe something maybe you're being ultra cautious I guess I'd like to get your thoughts on you know that because it sure seems like you have plenty of capital.
Well, you're right, we do and we we've got a strong balance sheet and I think that we did protrude taken here I think is a balanced approach that allows us to preserve broad capability on the sales executions odd and set ourselves on a you know a much more efficient runrate do think that as we come through this.
Yeah, we're going to see how they were.
The question is how quickly do you get back to that.
28 million dollar revenue level that we were running out in the second half of last year and you know we're confident that we have a team of the structure in place that can go we can maintain as we have moved back toward that level. Then I think we'll do it on a more efficient runrate than we were before then once we confirmed.
Timing then we'll talk about you know what's the additional investment profile look like after we get back to that level.
And last one if I could just sneak it in the you talked about the.
You know suspended recovery, the and processing of tissue.
And I think the inventory I I've always kind of study you guys, just having <unk> that sufficient amounts, but I imagine that means you must have you know over a year or something something of that magnitude that you can access without having to process anything new it that'd be fair.
Yeah, no you're you're right about that we as our our normal contingency planning.
How's that have sufficient and already in place of when we run into a situation like this that we can stop processing for a while and not the impact supply to to customers and like we said, we're going to start a ramping up tissue processing again here in such a quarter well either.
Into it you know, we're not going to step on the gas and run real fast real soon we don't need to do that but we'll wrap it up over time and get back to normal production levels.
You know as for recovery rates return to normal levels.
Great. Thanks, a lot.
[noise] [noise] Mr. Denhoy as for the Jeffries has to be registered please go ahead Sir.
Oh, sorry rise did we lose you.
Sorry about that I was actually <unk> as it happens but.
So he's working from home right. So actually my my my questions are really really kind of focus more on the sales force activity again, you know why was asking about the 825 Rep. Excuse me account you guys, having a quarter, which was something like 13%. That's curious shares you moved in April and now here on the March you know you've seen any resumption in you accounts or any any new.
Activity in terms of physicians wanting to get trained.
Yeah, I mean that can we kind of support the growth kind of picking up as you move into backups of your.
Well I think it's too soon to think about active account because we're as as counts are really trying to just open and get started again.
If I.
<unk> again, we do think that that working with our active surgeons, they're going to want to move and two additional sites have cared to so they get the our time and we're working with them to support that so they can continue to drive deeper in their penetration.
That's been <unk> and has been that was our strategy as we started the year wants to continue to build we have a good base a surgeon users today and we think we have a tremendous opportunity to go deeper with that certain base and so that's the strategy we're still continuing.
Understood. It in just the last one on the sales force you know when you think about a turnover rate you know how are you mitigating that in or you sort of making your sales reps relatively cool. During this period in terms of commissions and other things that you can you can limit that turnovers.
Yeah, we did some mitigation plans on compensation <unk> people have predominantly a variable compensation and especially when we asked sales people to shelter at home and not go into a cats, we protected them on their income so that they.
They were not suffering from something that was entirely not their issue.
Okay. So we should use that number about 109, then for the balance of the year you think.
Yeah.
Okay, great. Thank you.
As a reminder, if you wish that question. Please press Darwan is telephone keypad that star one.
No I'll have the question from Kyle Rose kind of course.
Just go ahead.
Oh, the G.N. onto <unk> I asked the piggy back off the the Rodgers comments a little bit.
I'm right on the numbers here I think the active accounts went from 79, you 123 to 798 Q4 and 825. This quarter. So she was like a little bit of a step up and she over Q. growth is there anything interesting you saw in January February to.
It seems like a step up and you are also kind of missing that month them large as well right right. Yeah, no <unk>, they definitely wasn't step up and the the thing that we were excited about is.
Really again predominantly existing surgeon users, who wanted to make sure that they expanded their usage across all the places that they did surgery.
And so we're continuing to drive deeper and gain more depth with our existing certain users that allow us to continue to drive that gross and of course that gives US access then continued to work with additional people that work at those same types of care.
So we're we thought it was a substantial step up and it was based on our focus strategy of driving penetration.
Makes sense and then kind of in terms of Red access is there any difference in terms of like what any existing you know heavy use your customer needs versus kind of a new customer in terms of training and education.
Oh, yes on any conversion of a surgical technique, we believe that an a a new user is going to need more support than an existing user does.
Or at least an an an established existing users somebody who's used the product a number of times in that type of settings remember nerve repair.
It's really many different types of repair a carpal tunnel repair is very different than you know a chainsaw injury. So those would be considered separate types of repair and a surgeon <unk> assistance when they're really trying the first few cases of every different type of repair.
What we're finding and the new environment working with surgeons virtually is that you can really use a lot of the digital tools that we have in place you know face to face.
It's time people during the case talk to them about the the critical setting that they have what the issues are Ah working with the coordinators, both before and during the surgery I'm doing what typically would've been a scrub sink a discussion with a surgeon before the case.
All of those are tools that we've implemented and we found actually quite welcomed by the surgical staff and the surgeon. So we've continued to implement that as well as now supplementing it with a direct face to face contact.
Where where appropriate and centres that are allowing that.
Okay. Thank you.
[noise] saves in general have we reached the end of the question and answer session and I would like to turn the call back over to <unk>.
Closing remarks et cetera.
Thank you Jerry.
I want to make everyone for joining us on today's call. We look forward to speaking with many of you at the upcoming Jeffries virtual healthcare conference in June. Thank you very much.
Just includes today's topic. She may disconnect you realize that this time. Thank you for your participation.
[noise] okay.
Based on this one.
[noise].